Retail space leasing supply in Kyiv could expand by 23% by late 2013, say experts
Kyiv, August 1 (Interfax-Ukraine) – Supply on the retail property market in Kyiv in the second half of 2013, taking into account facilities declared for opening, could expand by 23%, to some 1.2 million square meters of a combined gross lettable area, and the supersaturation of the retail property market in the capital is anticipated in late 2015.
The forecast was presented by representative of the Ukrainian Trade Guild (UTG, Kyiv) at a press conference at Interfax-Ukraine in Kyiv on Wednesday.
"By late 2013 we expect a large supply, which will be represented by seven shopping centers with a combined gross lettable area of over 190,000 square meters, and which will increase the market stock in Kyiv by 23%, to some 1.2 million square meters of lettable retail area," Head of Strategic Consulting Department at UTG Viktor Oborsky said.
He said that in January-June 2013, two shopping centers with a combined gross lettable area of 13,630 square meters were commissioned in full or partially.
The vacancy level on the Kyiv retail property market in the first half of 2013 grew from 0.9% as of early 2013 to 2.7%, which is a "technical" indicator that appeared due to the re-signing of agreements and the reshuffling of leasers, he said.
"Rent rates in H1, 2013 were stable, and we expect that by late 2013 they will not change," he added.
The UGT said that rent rates in professional shopping centers in Kyiv in January-June 2013 totaled $30-100 per square meter a month (value added tax and operating costs not included) and average market rent rates for premises of 100-200 square meters amounted to $70 per square meter a month (value added tax and operation costs not included).
The interest rate from turnover with the mixed rent rate formation scheme in H1 ,2013 was 3-5% for anchor leasers and 10-17% for operators of retail galleries in Kyiv's shopping centers.
By late 2013, 20 new brands will enter the Kyiv's retail property market.
Oborsky also said that today, 24 retail property projects with a combine gross lettable area of 989,540 square meters declared for opening in 2014-2016 are at various stages of realization and various levels of readiness.
An UTG partner Vitaliy Boiko added that with the commissioning of the declared projects the supersaturation of the retail property market is expected. The supply of high-quality premises as of late H1, 2013 was 325 square meters per 1,000 residents, and by late 2013 it could reach 550 square meters per 1,000 residents.
"Totally, we'll have over two million square meters, which will result in a saturation indicator of around 700 square meters per 1,000 residents," he said.
The experts said that if the said projects are commissioned, leasers could move to new shopping centers by 2016 and rent rates will fall.
The experts also do not expect that the mortgage credit market for developers will restore in Ukraine in coming two or three years.
Ukrainian Trade Guild was founded in 2001. It specializes in providing comprehensive support for development projects. Over 12 years of work it has participated in opening some 97 real estate objects. Among them are the Ocean Plaza trade and entertainment center (Kyiv), Meganom (Simferopol, Crimea), French Boulevard (Kharkiv), and others.
The UTG is selecting tenants for 17 objects with a total leasable area of 772,000 square meters. The UTG in 2012 managed seven shopping centers in Ukraine with a total leasable area of 325,000 square meters.
The UTG is a member of the Association of Trade Centers of Ukraine and the International Council of Shopping Centers (ICSC), and is also a member of the Urban Land Institute (ULI).